When a time series is analyzed by the model y_t = T_t × S_t × I_t, which of the following is valid? A) Setting the estimated value of T_t and S_t at 1. B) Setting the estimated value of T_t at 1. C) Setting the estimated value of I_t at 1. D) Setting the estimated value of S_t at 1.

Question

Quizplus · Accepted Answer

In a multiplicative time series model, setting the estimated value of the irregular component (I_t) at 1 is valid as it represents no irregular effect, allowing the focus on trend (T_t) and seasonal (S_t) components.

When a Time Series Is Analyzed by the Model Yt

When a Time Series Is Analyzed by the Model Y_t